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Building dept still using reserves in operations

The cost of delivering services in the city’s building department still significantly outweighs its revenues despite a significant increase in building permit fees implemented almost two years ago.

City council received its annual report Monday from the city’s chief building official outlining the department’s annual revenue and expenditures for 2016.

Ontario’s Building Code Act requiems an annual fee report on outlying revenue expenditures, direct or indirect as well as a status report on the reserve fund held for the necessary expenditures.

While the report shows a smaller reliance on the reserve fund from the 2015 year, the city’s building division is still operating with a deficit.

The reserve fund has allowed the department to maintain established service levels and will likely continue to do so for the projected next five years of budgets, the report to council states.

In 2016 city council passed a resolution increasing building permit fees by 28 per cent, a little less than the recommended increase of 37 per cent.

The increase, which applied to all sectors – residential, industrial, commercial and institution – requiring building permits under the Ontario Building Code Act, was instituted to reduce the department’s reliance on its reserve account.

In 2016, the department’s total building enforcement costs were just shy of $1 million. Of that, indirect costs for support and overhead services to the department were pegged at $38,389.58.

With total costs of $1.038 million, and revenues from permit fees totalling $872,083.58, the difference of slightly more than $166,000 was taken from the reserve account.

The report to council states the reserve fund, as of Dec. 31 2016, is left with about $277,000.

The building department pays rent within the Civic Centre, a practice that began in 2003 – a decision that was made in the quest to create revenue for the municipality during another hard financial period.

But because the reserve fund had a hefty balance at that time, no one questioned the move or how the reserve would be impacted more than a decade later.

Since that time, permit cost increases have ranged between zero and a mere 2 per cent, and low growth periods are attributed to the revenue shortage.

Discussions for several years looked at the possible implementation of development fees.

Development charges are an additional charge builders incur when building new. Monies paid are designated to offset costs associated with additional city infrastructure needed to accommodate growth. The levy is often used for items such as new roads, sewers or public transit.

Stakeholders, including the Sault Ste. Marie Chamber of Commerce and the Sault Ste. Marie Construction Association, have voiced their opinions that development charges will have a detrimental effect on development in Sault Ste. Marie.